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The Window of Opportunity for San Diego Homebuyers Quickly Disappearing.
Article after article has been written describing the record number of foreclosures and further declines in value that will be taking place in 2008. These numbers have all been based on one fact. President Bush felt that the sub-prime mortgage problem was an individual homeowner's problem and that the federal government was not there to bail them out. After realizing the sub-prime meltdown has shaken financial markets throughout the world government intervention was needed. With President Bush's new plan in place, it will allow the borrower to fix their initial interest rate for a five-year term as long as the consumer is current on their mortgage. An evaluation will be done to determine a borrower's ability to handle the higher payment if their loan adjusts. I suspect that most homeowners will qualify for the freeze of their interest-rate. In San Diego estimates show over 10,000 homeowners could be saved from foreclosure in 2008 and allowed to keep their homes.
After the existing inventory of foreclosures disappears the consumers that are waiting for the bottom of the market will be in for a big surprise. Already local agents are experiencing multiple offer situations on the bank owned properties that are offered for the best prices. In many cases the sales prices on these properties are going above the initial prices they were listed at. A combination of declining prices and 100% financing readily available to consumers through FNMA at conforming loan limits of up to $417,000 is creating a buyer's paradise. Additionally appraisers are starting to see values leveling off throughout Southern California. It is looking like this window of opportunity to purchase a bank owned a home will be short-lived.
Unfortunately for many consumers fear will drive them to sit on the sidelines of the market until the media starts to report that we have a recovering market. A recovering market for the consumer means higher prices, the loss of many seller concessions like having their closing costs paid, many competing homebuyers, and a lower level of inventory available. With the federal government lowering the discount rate and mortgages that are below 6%, now is the window of opportunity to buy a below-market home. When the news about the market is at its worst the opportunity for profit is at its best, but not for long.